Voluntary redundancy

Employers often call for volunteers first, to avoid compulsory redundancies. An employer asking for volunteers need not apply the selection procedure to them. A failure to ask for volunteers will not make compulsory redundancies unfair (Rogers and others v Vosper Thornycroft [1989] IRLR 82).

An employer is not obliged to accept candidates putting themselves forward for voluntary redundancy. Employers will want to make sure that after the redundancy exercise, the business has retained the right skills mix. Terms for voluntary redundancy can (but will not necessarily) be better than those for compulsory redundancy.

As long as there is a genuine redundancy situation when the employer invites candidates for voluntary redundancy, voluntary redundancies are treated as redundancy dismissals for the purpose of statutory redundancy payments. However, employees should be careful to avoid any suggestion that they are ending their contracts through mutual consent.

Employers may propose early retirement as a way of avoiding compulsory redundancies. In Birch & Another v University of Liverpool [1985] IRLR 165, the Court of Appeal held that employees opting to retire early in circumstances where compulsory redundancies were expected but had not yet been announced had terminated their contracts by mutual consent. They lost their entitlement to redundancy pay.

No employee is entitled be selected for redundancy, voluntary or otherwise, even if there is a genuine redundancy situation. It is not a breach of contract for an employer to refuse to declare voluntary or compulsory redundancies. It is the employer’s decision whether or not to do this (Welch v The Taxi Owners Association (Grangemouth) Limited UKEATS/0001/12/B1).

This general rule is subject to the special statutory procedure, explained in Chapter 9, which allows employees to call on their employer to make a redundancy payment after a fixed period of lay-off or on short-time working.